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Offshore Income CRA Latest Statistics – Toronto Tax Lawyer Commentary

Unreported Offshore Income & CRA Annual Report to Parliament – Background

The new Offshore Tax Informant Program announced in January 2014 and the reporting of electronic funds transfers which began in January 2015 are part of the CRA focus on unreported offshore income and are both discussed in the 2014-2015 CRA Annual Report to Parliament which was released in late January 2016. CRA provides an annual report to parliament under the legal requirements of the Canada Revenue Agency Act that provides insight into its activities over the past year. The report provides detailed information on the performance of the CRA for the previous fiscal year including figures and information about unreported offshore income initiatives and the new OTIP rewards program.

CRA & Unreported Offshore Income – Toronto Tax Lawyer General Summary

The Offshore Tax Informant Program (OTIP) allows the CRA to give financial awards to individuals who provide specific detailed information related to offshore tax evasion which lead to the tax assessment and collection of more than $100,000 of additional federal income tax (excluding penalties and interest). The award to tipsters is 5% to 15% of the federal income tax collected as a result of the reported offshore tax fraud. The CRA Offshore Compliance Division which was established in 2013, administers all aspects of the Offshore Tax Informant Program including contacting informants, referring cases for income tax enforcement action and paying the awards to tipsters. In addition, as of January 2015, financial intermediaries have to report to the Canada Revenue Agency international electronic funds transfers (EFTs) of $10,000 or more. This reporting requirement is applicable to financial intermediaries currently reporting international EFTs to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). In particular banks and credit unions as well as money services businesses and casinos are required to report these transactions.

See also
The REAL truth about Canadian Voluntary Disclosure

Offshore Tax Informant Program (OTIP) – Statistics for 2014-2015

As of March 31, 2015, the OTIP had received 1,920 calls from Canadians. CRA identified 522 of those calls as coming from potential informants. From those potential calls, 201 submitted written submissions to CRA and 110 tax fraud cases are actively under review by tax investigators. CRA also received information on approximately 3 million international electronic funds transfers of over $10,000 in the first quarter of 2015 which are also dealt with by the Offshore Compliance Division which has established specialized teams responsible for conducting offshore income tax compliance audits.

Voluntary Disclosure Program – Toronto Tax Lawyer Summary

Canadian taxpayers who have unreported offshore assets or income may be able to submit an application for the Voluntary Disclosures Program (VDP) or tax amnesty program. The VDP allows Canadian individuals and corporations to correct inaccurate or incomplete information, or to disclose information not previously reported such as offshore income or assets, without the fear of tax evasion prosecution and with no penalties. Included are Canadian taxpayers who have not have met their income tax filing obligations because they had unreported income including offshore income or did not file an information return such as a T1135 or T1134 for unreported offshore assets. Individual or corporate Canadian taxpayers who make an accepted tax voluntary disclosure through a Toronto tax lawyer will have to pay the tax liability owing plus interest, but are not liable for civil tax penalties or prosecution for tax fraud or income tax evasion.

See also
Judicial Review of Discretionary Decisions by CRA

Voluntary Disclosure – Must Contact CRA First

In order to be eligible for a Canadian tax voluntary disclosure the Canadian taxpayer with unreported income must approach CRA and submit the voluntary disclosure, either with identify fully disclosed or on a no-names basis, before any tax audit or contact from CRA. If CRA has initiated an income tax audit or investigation, or possibly even sent an enquiry letter, it may be too late to qualify for the tax voluntary disclosure. If you have undisclosed offshore income tax or assets contact one of our top Toronto income tax lawyers for a consultation before CRA contacts you.

Disclaimer:

"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

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